Legal News for UK Co-ops and Mutuals

This is a blog where brief information about developments in UK Co-op and mutual law will be reported. Readers of this blog will also find Linda Barlow's Co-operatives UK Blog at http://www.uk.coop/blogs/linda.barlow helpful. For an network of academics working on co-ops, mutuals and social enterprises visit http://blogs.kent.ac.uk/r-comuse/2012/09/welcome-to-r-comuse/

Wednesday, May 23, 2012

Non-User Investor Members in UK Co-operatives

2006 saw the liberalisation of FSA
policy on the use of “investor shares” for non-user investor
members. The FSA document permits co-operatives to have non-user
investor members who hold “Investor Shares”, subject to
restrictions to protect the interests of user members. These include
restricted voting rights for investor members, compliance with
applicable regulatory requirements under FSMA 2000, and an overriding
requirement that the society remains, in the FSA’s view, a “bona
fide co-operative” (Investor Membershipof Co-operatives registered under the Industrial and ProvidentSocieties Act 1965 A Policy Noteby
Michael Cook and Ramona Taylor, Financial Services Authority, 2006).
This change was uncontroversial among those consulted by the FSA as
it addressed the need of co-operatives to raise capital.

However, it may be of considerably more use and interest now that the statutory limit on holdings by members other than industrial and provident societies has been removed for non-withdrawable shares in societies.

Advice to FSA on New Registration Guidance

From the Autumn of 2011 until March 2012 I was involved, as part of a team in Cobbetts LLP in developing advice for the FSA on the registration requirements for co-operatives and community benefit societies. Those involved were Michael Cook and Ramona Taylor of the FSA, and Kevin Jaquiss, Cliff Mills and Ian Snaith of Cobbetts LLP. On 27th February 2012 a consultation meeting on the opinion and linked matrix about financial services regulation was held at Cobbetts LLP. The meeting was attended by a representatives of a wide range of co-operative and social enterprise bodies and advisors, invited by the FSA. Here is the advice and here is the matrix put online at the request of Michael Cook.

It will be interesting to see what the next stage of this process will be from the FSA which is currently undergoing substantial reorganisation in readiness for the changes in the Financial Services Bill 2012 and the draft regulations referred to here.

Co-op Law Consolidation: Where is it now?

The project to consolidate the legislation for co-operatives and community benefit societies in the UK still seems to be at the stage of a brief being drafted by HM Treasury for the Law Commission. As of today I could find nothing on the English Law Commission website or the HM Treasury website.There was an estimate in the March report of Co-operatives UK's management to its board that once the Law Commissions are briefed it will take 9 months to achieve the drafting of the consolidated statute. Then it has to be reviewed by the appropriate Parliamentary Committee and passed. Could be a long job........